Australians have been urged to turn the spotlight on their bank accounts — and the fees and charges they are being deducted — to ensure their hard-earned is working for them and they are not leaving “free money on the table”.
Australian households paid $3.37 billion in bank fees in 2022-23 and the Commonwealth Bank’s decision to charge some customers $3 to access their own money put the topic back under the microscope this week, even if the big four institution hit pause on the rollout following significant backlash.
Amid a cost-of-living crunch and with the New Year on the horizon, money gurus say there has never been a better time to take a deep dive into their accounts.
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“It’s sensible to obsess over fees. You should understand exactly what you’re getting for your fees,” 7NEWS finance expert Gemma Acton said.
“If you’re not, then ask – and if you can find a cheaper alternative that reliably provides the level of service or product you need, go with that.
“Any time you’re unnecessarily paying higher fees, that’s money going directly from your pocket to theirs.”
Acton said fees and interest rates on banking products “change literally every day” and proactive customers who carry out a monthly account health check are best placed to ensure they are not “leaving free money on the table”.
“Try to understand your own financial situation as much as possible,” she said.
“It can seem really overwhelming at first dealing with different products and providers and lots of financial terms.
“But even if you try to familiarise yourself with a little more every day, you’ll be really well-armed to stand up for yourself in conversations with any providers and make sure you get the best support for your individual situation.”
Don’t ‘set and forget’
Financial advisor Alex Jamieson said many Australians do not realise how much they are losing to bank fees and charges.
“Like superannuation and other types of financial facilities, bank accounts should never be a set and forget activity,” Jamieson, founder of Melbourne advisory firm AJ Financial Planning, said.
He added: “Many people don’t bother to check the changes or if they do, they consider the changes too small to matter.”
“Unfortunately, over a period of time, increased fees can add up.
“In addition, a reduction in interest means that people are not getting decent returns on their money. Your money should work for you while it is sitting idle and this is what interest does.”
Alex Jamieson’s eight banking tips
Monitor your accounts closely: Review monthly statements to identify and avoid unnecessary charges. Don’t just accept new bank account terms which are often dressed up as nice new shiny names with great options that ultimately remove important features.
Every time the bank says it is offering you something new and exciting, be alert. Banks seldom do anything for the benefit of customers. They work largely for their shareholders.
Compare bank accounts: Do your due diligence and make the effort to compare bank accounts across the market space. You will be surprised at much they can vary. Look for accounts with no or low monthly fees and unlimited free transactions.
Set up alerts: Try to be more aware of what is happening with your bank accounts. Use mobile apps to get notified before overdrawing or hitting transaction limits. This will help you avoid unnecessary fees and charges.
Switch to fee-free ATMs: Banks are making it more expensive for people to use cash. They want to push you to online banking because it reduces operational costs for their organisations. The issue is that many people, including older people, still use cash.
To avoid cash fees, switch to banks and accounts that offer fee-free ATMs. Use ATMs within your bank’s network or consider cashless payment options.
Negotiate with your bank: Depending on how much business you do with your bank, they may be prepared to negotiate. If not, look for a bank that will. Request fee waivers or discounts, particularly if you are a loyal customer or a potential customer bringing a good amount of business to them.
Many smaller community-focused financial organisations offer excellent deals on bank accounts.
Consolidate accounts: Many people have more bank accounts than they really need. Reduce complexity by holding fewer accounts, minimising fees and improving financial control.
Opt for online banking: Most of the world is moving to digital. If you need a prompt to do this, cash fees may be the final push you need. Many online banks offer lower fees and higher interest rates on savings accounts.
Leverage cashback and rewards: Financial institutions are always looking for ways to lure in new business and often they do this with incentives and rewards. Choose accounts offering cashback on purchases or rewards to offset fees.